A
Hydro-Québec
Requête R-3401-98
DUFF & PHELPS CREDIT RATING CO.
22 OCTOBRE 1999
Original : 2000-08-15
HQT-8, Document 3.4
(En liasse)
Hydro-Quebec
Credit Analysis
Lori R. Woodland (312) 606-2309
Douglas J. Laskowski, CFA (312) 368-2053
Ratings:
October 22, 1999
Security Class
DCR
Latest Change
Debentures
MTNs/Bonds
Commercial Paper
AAAAD-1+
06/1996
06/1996
07/1991
Rating Watch:
Prior
AA
AA
NR
Moody’s/S&P
A2/A+
A2/A+
P-1/A-1+
*/No
No
Rating Rationale
Hydro-Quebec (HQ) has an acceptable business risk profile and stable credit protection measures. HQ is solely owned by the provincial
government of Quebec, which unconditionally guarantees the vast majority of HQ’s debt.
●
HQ’s low-cost hydroelectric-based generating system provides a distinct advantage over neighboring Canadian and northeastern U.S. electric utilities. While only 9% of total HQ power sales are outside of Quebec, additional power will likely be exported as the utility increases transmission capacity, constructs additional generation and raises its power marketing presence.
●
Credit protection measures are expected to improve modestly. Despite a rate freeze through April 2002, cost control measures
are combining with small increases in provincial kwh sales, greater natural gas revenues and reduced borrowing to improve
cash flow. Sufficient financial flexibility exists to support new investments, as HQ reloops transmission in Montreal, constructs
an interconnect with Ontario Hydro and seeks to build capacity at Toulnustouc and Churchill Falls.
●
Load demand within Quebec is linked to the health of the U.S. economy. Exports are now more than 50% of Quebec’s GDP,
and more than 80% of the province’s exports are destined for the United States. HQ has some sensitivity to deeply cyclical
aluminum prices, as Alcan maintains a large presence in the region. To the extent economic and political developments negatively impact the Quebec economy, credit quality could be weakened, although this risk is low.
●
HQ has unparalleled dispatch flexibility in its ability to manage reservoirs. HQ can purchase electricity at inexpensive off-peak
periods, and utilize its reservoirs to sell electricity during the highest-margin on-peak hours. The utility should have increased
opportunity to market its power as Ontario deregulates.
●
HQ’s strong management team has been operating the company more independently from the province. Management is viewed
positively for its profit-oriented focus, successfully reshaping HQ into a more efficient electric utility.
Liquidity/Debt Structure
HQ has healthy liquidity, with US$ 1.8 billion of committed credit facilities, and has the ability to issue more than US$ 3.7 billion of mediumterm notes under its shelf registration. Without the large construction projects of earlier years, HQ’s borrowing needs are modest relative
to historical levels. The debt portfolio is well managed, as long-term maturities have been extended as far as 2035. The company’s
spread paid for debt is improving, as it is borrowing less. Approximately half (53%) of all HQ debt is U.S. dollar-denominated, and 30%
of all debt is at floating interest rates.
Recent Developments
A final arbitration decision is expected by Spring 2000 regarding
a dispute with 15 Vermont utilities (VJO). Disagreement centers
on whether HQ’s inability to deliver power during the 1-98 unusual
ice storm constitutes force majeure. The Vermont utilities also
have a $4 billion contract with HQ scheduled to expire in 2020,
with a significant price increase beginning on 11-1-99. It is
unclear whether the VJO are able to afford the above-market
rates under the contracts. In 6-99, HQ reached agreement with
local aboriginal communities to partially divert the Portneuf, Saultaux-Cochons and Manouane rivers in Quebec and construct a
440 mw power station on the St. Lawrence’s north shore. HQ’s
investment in the project is expected to exceed C$600 million,
with the Toulnustouc station to be commissioned at the end of
2005.
In 2-99, HQ signed a memorandum of understanding with
Ontario Hydro to construct a 1,250 mw interconnection.
Government hearings may need to be held for the project to
proceed, with commissioning expected in 2002. Through the
interconnect, greater opportunities should arise to market to the
middle United States.
*DCR does not track Moody's review status.
Negotiations continue between HQ and Newfoundland and
Labrador Hydro (NLH) toward developing 3,200 mw of projects
on the Churchill River. Completion is expected in 2006-2008 with
a total investment now reduced by C$900 million.
Fundamentals
With access to more than 36,000 mw of generation, HQ is North
America’s largest electric utility. HQ generates more than 96% of
its energy through low-cost hydroelectric power.
HQ’s debt obligations are supported by a provincial guarantee.
The Province of Quebec has now balanced its budget, one year
ahead of its plan.
HQ’s strategic plan focuses on growth and profitability. The
utility’s goal is to increase sales by 25% from 1997 sales levels
over a 10-year period. Based on its plan, HQ projects an ROE of
11.8% by 2002, with total investment over the five-year period of
approximately $14.5 billion. Equity capitalization is expected to
reach approximately 31% by yearend 2002, primarily due to
earnings growth and retention.
Duff & Phelps Credit Rating Co.
Introduction
This analysis will address HQ’s key credit issues, namely 1)
public policy seeking to strengthen the utility; 2) its highly desirable hydro assets; 3) expanding power sales to the U.S.
market; 4) improving financial ratios; and 5) the provincial guarantee supporting most HQ debt.
In addition to lowering costs and optimizing its asset base, significant competitive implications exist as HQ expands its power
marketing presence in the United States. HQ has the most
competitive power available in its region, and the utility is preparing to maximize this strength by increasing the number of
venues to sell its power. Debt and interest coverage ratios are
expected to improve as cash flow increases and debt gradually reduces.
Public Policy Encourages Shareholder Value
For more than five years, HQ has been encouraged to maximize value for its owners. With attention now focused on cost
reduction and asset optimization, the province’s goal is to reduce HQ’s financial dependence on its owner. This shareholder focus is a significant policy change for the
government-owned utility.
Cost reductions have been successful, with a 19% reduction
in HQ’s workforce since 1994. Margins should also benefit from
three means of asset optimization.
First, HQ is relooping transmission in downtown Montreal. The
120 Kv line has been completed, and the 315 Kv line should
be completed by the end of 1999. The lines damaged by the
January 1998 ice storm have now been rebuilt and are more
resilient. Through relooping, HQ can also move power more
efficiently within its retail service base, and increase its ability
to export power. Through its transmission division
TransEnergie, HQ also received accreditation by the Northeast
Power Coordinating Council of the United States to increase its
transmission exports by 250 to 500 mw into the NEPOOL region.
Second, HQ continues to refurbish several generating stations,
namely Shawinigan 2 and 3, La Gabelle, La Tuque, Bersimis 1,
Manic 2, Chelsea, Rapides - Farmers and Beauharnois. In
1998, it also returned 25 mw of hydro generation to service
(Sept-Chutes and Chute-Bell).
Third, HQ is now successfully trading oil through its 600 mw
Tracy thermal plant. HQ owns approximately 300 million barrels of oil. The need for oil was derived from fueling the Tracy
station, however its location is also attractive for trading oil. Located on the St. Lawrence Seaway, the Tracy storage area
permits easy movement of the fuel.
Credit Analysis
Even among hydro producers, however, HQ has the unusual
ability to manage stream flows by adjusting reservoir levels.
Through its reservoir system, HQ can control its movement of
power. Profit implications are significant, as HQ can purchase
base load power at a very low cost and sell its hydro power
during the higher margin peak hours.
With access to 50 hydro units totaling 34,631 mw, HQ is the
largest hydro generator in North America. These are not small
units. The single-unit Robert-Bourassa (formerly La Grande
Unit 2) facility has 5,328 mw of capacity, and the four other La
Grande (translates to “the Big One” from the French) units total
8,321 mw.
HQ is also increasing its hydro capacity. A 440 mw facility is
being developed with local communities for C$600 million.
Toulnustonc station (the Betsiamites project) should be commissioned by the end of 2005.
Discussions continue between HQ, Newfoundland and Labrador Hydro and the Inuits to develop a 17 Twh, 3,200 mw
project. If a memorandum of understanding is reached, the
project is expected to cost a significant C$6.6 billion in 2007
dollars over 10 years, and require one river diversion.
Selling More Power Into the United States
HQ’s targeted expansion is 20 Twh, or a 12% increase in new
sales in all markets by 2002. To reach this goal, HQ is focusing
on selling more power throughout the United States and
Canada. Approximately 15% of consolidated revenues in 1999
are expected from external power sales, principally to the
United States, with additional sales expected there in the future.
HQ is expanding its marketing presence in the United States,
as new opportunities arise through deregulation. This is a wise
strategy, as peak load demands are increasing in the United
States, and HQ is the lowest cost provider in its chosen regions.
The Ontario Interconnect will provide an important means of
accessing the Pennsylvania-New Jersey-Maryland (PJM) and
East Central Area Reliability Coordination Area (ECAR— Indiana, Ohio, Kentucky, Virginia, West Virginia, Pennsylvania and
Michigan) regions. Assuming an environmental permit is
granted in the spring 2000 to HQ’s TransEnergie division, the
1,250 mw transmission line is expected to be commissioned by
2002.
The Interconnect permits greater flexibility in dispatch, allowing HQ to sell power to the most profitable areas of either
Ontario, PJM or ECAR. It will also permit HQ to purchase inexpensive power from Ontario’s base load units during off-peak
hours, and use its reservoirs to sell peaking power in the most
profitable locations.
Desirable Assets
It is difficult to imagine generating assets more desirable than
HQ’s fleet of hydro units. Hydro assets have a lower variable
cost than other types of generation, and lack the stranded cost
and environmental issues characterizing nuclear and thermal
plants. HQ does own one nuclear plant, the 675 mw Gentilly
unit, however it is less than 2% of total generating capacity.
2
Ontario is in the process of opening its province to competition.
As generation in Ontario is concentrated among base load
units, HQ will likely have opportunities to sell high-margined
peaking power within this neighboring province.
Duff & Phelps Credit Rating Co.
Credit Analysis
The greatest opportunity may lie further south. HQ obtained its
FERC marketing license in 1997. HQ power will likely be in high
demand among the PJM and ECAR regions due to increasing
peak loads and the concentration of nuclear units in the region.
As the attached table notes, PJM and ECAR reached new peak
loads in the summer of 1999. Demand for power is rising in
these reliability regions, yet increased capacity is only being
added modestly — certainly not at the rapid pace planned to
double capacity in the Northeast Power Pool (NEPOOL) region.
Table 1
Latest Record Peaks Set Summer ’99
Peak
Peak
Sum. ‘98 Sum. ‘99 (Date) Increase
System
EAST CENTRAL AREA RELIABILITY COORDINATION AGREEMENT
(ECAR)
American Electric Power
19,414
19,928
(7/30) +2.65%
Dayton P&L
3,007
3,130
(7/30) +4.09%
Consumers Energy
7,246
7,473
(7/30) +3.13%
FirstEnergy
11,931
12,713
(7/30) +6.55%
Indianapolis P&L
2,859
2,898
(7/29) +1.36%
LG&E Energy
5,986
6,357
(7/30) +6.20%
N. Indiana PS (control area) 3,100
3,307
(7/30) +6.68%
All-time record peaks in boldface
Winter-only records in italics
Source: Electric Utility Week, August 9, 1999
Penn-New Jersey-Maryland
Reliability Region
49,406
In 1997
51,550
(7/13) +4.30%
As in Ontario, these regions have large base load units. PJM
and ECAR have a concentration of nuclear and coal-fired units.
HQ is expected to supply highly profitable peaking power to
these regions. The reserve margin in PJM, based on the 1999
peak load, is a narrow 8.7%. In ECAR, the reserve margin was
targeted to be 10.8% this summer, however actual reserve
margins are not available. PJM is a large market; it is the third
largest centrally dispatched entity in the world in peak mw,
second only to the French and Tokyo electric systems.
By selling more power into the United States, HQ should enhance its profitability from favorable currency conversion. For
many years, the Canadian dollar has languished relative to the
U.S. dollar. With production costs measured in Canadian dollars, and power sales occurring in the higher-valued U.S. dollar, HQ is likely to enhance earnings through currency
translation. Of course, risk exists in the event the U.S. dollar
weakens relative to the Canadian dollar, thereby reducing
profit margins. As Table 2 illustrates, the Canadian dollar has
declined relative to the U.S dollar over the past few years, with
modest strengthening in recent months.
Table 2
Canadian Dollar Value (in U.S. Dollars)
1996
.7334
1997
.7222
1998
.674
1999 Forecast
.644
Actual 10-14-99
.6755
HQ is an able manager of currency exposure with a long history of maximizing C$/US$ spreads. During its construction of
large generation stations in the 1960s through 1980s, a significant portion of HQ’s debt was issued in U.S. dollars.
HQ is active in today’s currency market through its remaining
U.S.-dollar denominated debt of approximately C$20 billion, as
well as its existing power sales in the northeastern United
States. Through the New England Power Pool (NEPOOL), HQ
exports approximately 10% of its total power production. It sells
approximately 1,535-1,835 mw of power under contractual arrangement to several Vermont and New York utilities and power
authorities.
Dollar revenues are also derived from certain large industrial
customers in Quebec. As certain end products (pulp, paper)
are denominated in United States dollars, those customers
have chosen to pay in United States dollars.
HQ is also trading power on a wholesale basis, and is working
to expand its sales beyond the Northeast. In 1998, it opened
marketing offices in Pittsburgh and Boston.
None of these efforts should impair HQ’s ability to service its
retail load. Overall, the utility is increasing its sales flexibility. It
is 1) optimizing grid management, through looping in Montreal;
2) upgrading existing plants and returning to service those
which had been mothballed; 3) optimizing use of its reservoirs;
and 4) using physical options. These options include purchasing inexpensive power at off-peak hours and selling on-peak,
and constructing the Ontario Interconnect.
The Vermont Joint Owners
DCR does not view the dispute with 15 Vermont utilities (VJO)
as a threat to HQ’s credit quality. The VJO has contracts to
purchase 335 mw of power from HQ through 2020. Rates on
the contracts' $4 billion value are well above market and
scheduled to increase significantly on 11/1/99. The VJO are
incurring difficulty in paying for these contracts, as they lack
state regulatory support for ratepayer funding. The Vermont
Public Service Board (VPSB) has ruled that costs on the HQ
contracts are “over market.” While the VPSB has approved a
temporary rate increase for the Vermont utilities through 3-3100, the long-term nature of the obligations without full support
from the VPSB threaten the financial viability of the utility group.
The VJO seek damages and a termination of the contract,
claiming that HQ did not honor its delivery obligations during
1998’s unusual ice storm. HQ claims force majeure occurred,
and the disagreement is under arbitration. A final decision is
expected by Spring 2000.
It should be noted that the VJO are obligated under the HQ
contract on a joint and several basis. The Vermont regulatory
commission is considered below average in its lack of support
for state utilities; whether it will tacitly permit its utilities to face
insolvency due to the joint and several nature of the large obligation is an open question. In the event the VJO are unable to
pay for their HQ obligations, HQ should easily find other buyers for its low-cost power, though at lower prices.
3
Duff & Phelps Credit Rating Co.
Entering Other New Markets
Natural Gas
HQ has entered the natural gas distribution and brokerage
business. In 1997, HQ acquired an interest in Noverco Inc., a
holding company overseeing Gaz Metropolitain, Inc. Gaz
Metropolitain, Inc. is a natural gas distributor regulated by
Quebec's energy board (the Regie de l'Energie).
HQ has a 41% interest in Noverco with options to purchase an
additional 9% from the other partners, Enbridge Inc. (formerly
IPL Energy) and Laurentides Investissements S.A. (a subsidiary of Gaz de France).
In HQ's first full year of operation, its Noverco interest generated C$31 million of net income on C$518 million of revenue.
This business generates approximately 7% of consolidated
revenues.
Revenues should increase, as HQ has now partnered with
Enbridge to trade natural gas. Enbridge is the parent company
holding the local gas distribution business for Ontario. The
partnership trades natural gas in Ontario and the U.S.
HQ's investment in natural gas businesses is based on the
potential convergence of natural gas and electricity prices, with
opportunities to trade the "spark spread." HQ's expansion toward Ontario is twofold. First, through the 1,250 mw interconnect of electricity, and second through trading natural gas in
the area.
There is risk in trading natural gas without owning underlying
pipelines or storage access, though Enbridge owns a network
of pipelines in Ontario. At this point, HQ's investment in the
business is small relative to its consolidated asset base. Andre
Caille, HQ's president and CEO, also brings knowledge of the
natural gas industry. He is the former CEO of Gas Metropolitain.
Electricity
HQ is also devoting money to international electricity-related
investments. Projects are worldwide, including investments in
China, the Middle East, Asia, and French speaking African
nations. Through its HQI subsidiary (Hydro-Quebec International), it usually invests on a joint-venture scheme with local
and interntional partners. Investments include generation and
merchant transmission development.
Approximately C$200 million in annual international investments is expected through 2002. This investment is not large
relative to HQ's central interest in North America, however, it
does represent a broadening of its portfolio. No one HQ international investment is large enough to impact HQ's credit quality, and the portfolio is profitable.
Strengthening Financial Ratios
The combination of higher revenues and cost containment
measures are strengthening HQ’s cash flow. Coverage ratios
have demonstrated steady improvement since the public
policy focus on shareholder value began in 1993.
4
Credit Analysis
Interest coverage was 1.66X for the year ended 12/31/98, modestly below the 1.71X for the same period one year earlier. Interest expense for the utility averages approximately C$3 billion
annually. HQ’s interest coverage ratio is well below the 5.1X
median for U.S. utilities in the ‘AA-’ rating category, and its
EBITDA/Debt ratio of .133X was below the .39X median for
1998 as well. HQ does have some strong qualitative offsets to
these weak ratios, namely its role as monopoly provider in the
Province, and the excellent quality of its assets.
Coverage ratios are expected to improve, as higher cash flows
in HQ’s core business and increased power marketing opportunities combine with modest debt reduction. Rates in Quebec,
however, are frozen through April 30, 2002. Additionally,
Quebec's energy board rejected HQ’s proposal to charge customers a fixed price, preferring instead a cost of service basis.
HQ awaits a government decision on the board’s recommendation, but for now the cost of service basis is not in effect.
Continued cost savings will occur through changes made to
HQ’s pension obligations. With a pension program overfunded
by C$1 billion, HQ and its workers have collectively agreed to
cease contributions for the next five years, or until the pension
surplus falls to 10%. HQ is saving approximately C$48 million
annually under the agreement.
Net income of C$ 986 million is expected in 1999, which is 45%
above 1998 levels, and 25% above the more normalized level
seen in 1997. Expenses rose in 1998 due to the ice storm.
HQ remains dependent on deeply cyclical businesses, as the
province of Quebec has a heavy presence of aluminum manufacturing. Quebec is the world’s third-largest producer of aluminum, and the smelting and refining industry accounts for
6.2% of Quebec’s manufacturing sector. This dependence is
expected to remain constant on a percentage basis in the future. While Quebec is attracting more manufacturing businesses (in particular, Bombardier and Motorola have recently
announced large regional production facilities), Alcan began
construction of a C$2.5 billion plant in 1998. The Alcan plant
will be the largest private sector investment ever made in Quebec, adding capacity of 375,000 annual tons.
Second, the greater sale of power from Quebec will reduce
dependence on the local economy. GDP growth in Quebec is
currently averaging 3% annually, though the local economy is
at times challenged by a high tax rate and periodic unrest
among unionized workers. Relative to the United States,
Canada has higher tax rates; Quebec has the highest rates of
any Canadian province.
Quebec has recently faced strikes from its nurses, with threats
from a “common front” of 360,000 other public workers, including police and teachers. These strikes dovetail into HQ’s
months-long strike by 1,500 employees, or approximately 10%
of its unionized employees.
Duff & Phelps Credit Rating Co.
The striking employees do not impact essential HQ services,
as they work in billing and maintenance/repair of equipment
used for exports. The strikers are demanding a significant pay
increase of 13% over two years. HQ has offered these workers
a 9% increase over five years, plus a pension contribution holiday, and a bonus-driven compensation program. An agreement was reached in principle on Sepember 27 on terms near
HQ's proposal.
Debt Summary
Due to healthy cash flow, a net reduction of debt is expected
over the medium term. Through 2003, HQ has approximately
C$2 billion of annual debt maturities, except in 2001, whereby
more than C$3 billion in debt matures. The majority of this debt
is expected to be refinanced upon its maturity, and potential
excess cash flow exists to support additional outstanding debt.
In 1997, HQ began paying a dividend to the province. Approximately 35% of net income was paid as a dividend in 1998. Dividends are expected to continue near term.
The use of medium-term notes is expected for refinancings.
Most of the refinancing is expected to be performed in Canadian dollars, however other markets (principally U.S. dollars)
are monitored, and would likely be utilized if their parameters
became attractive. HQ has flexibility to issue quickly in either
market. It has medium-term note programs for US$3 billion,
C$2 billion on the Canadian market and US$4 billion on the
European market. In June 1999, HQ issued C$500 million of
debt with a 10-year maturity.
HQ coordinates its borrowings with the province of Quebec, as
these two entities are among Canada’s largest issuers of Canadian dollar denominated debt. Coordination should become
easier in future years as the province’s borrowing needs are expected to decrease.
HQ has sufficient financial flexibility. The utility has access to a
US$2.75 billion commercial paper program, and only C$59
million of that amount was used at 12-31-98. Slightly less than
half of all HQ debt is Canadian dollar denominated, with approximately 53% in U.S. dollars.
The Provincial Guarantee: Little Weight Given In
Credit Rating
The province of Quebec guarantees almost all HQ debt (except C$250 million in lines of credit). DCR attaches little reliance to the provincial guarantee, because 1) HQ’s cash flow
stability is derived from the lack of competition and high quality assets at the operating utility; and 2) public policy is encouraging HQ to operate with a business-driven approach.
Provincial finances are improving; Quebec has balanced its
budget this year, one year ahead of schedule. HQ is able to
support its debt, independently of the province.
Credit Analysis
in 11-98, has until 11-03 to call the next provincial elections.
Polls indicate more than two-thirds of Quebecois are against
holding another referendum regarding secession.
Whether a Quebec separated from Canada could maintain its
ability to support its financial obligations is beyond the scope
of this analysis. Quebec is, however, Canada’s second-largest
province in terms of GDP and in revenues generated to the
government. HQ remains insulated from governmental
changes as long as its financial flexibility is maintained. HQ is
now providing dividends to the provincial government, however these are as a percentage of income earned. Lacking
extraordinary dividends unrelated to net income, HQ remains
self-supporting and relatively independent of its owner.
Conclusion
HQ’s cash flow relies upon the strength of its hydro assets.
These attractive assets service a retail territory that is closed to
competition, plus attractive export opportunities exist. The
utility’s prospects are improving, as it lowers operating costs,
maximizes assets and pursues new opportunities created by
deregulation. Though financial coverage ratios are thin relative
to U.S. utilities, HQ has financial flexibility. It has significant
credit facilities remaining as a vestige of its days as a very large
borrower. This company knows how to manage substantial
borrowings over two currencies. Given its mandate to operate
as more of a for-profit enterprise, combined with increased
business opportunities and fewer borrowing needs, improved
coverage ratios are expected.
Statistical Summary
Owned/Accessible Generation
Hydro Assets
Nuclear, thermal Assets
Total
34,631 mw over 49 stations—Note 1
2,269 mw over 29 stations
36,900 mw
Note 1: Includes access to 5,428 mw of hydro generation at Churchill Falls
Generation Under Construction
Ste Marguerite 3
Toulnustonc
Total
882 mw hydro unit commissioning in 2001
440 mw hydro unit commissioning in 2005
1,322 mw
Peak Load:
35,300 mw on 1-14-99
Installed Capacity: 36,928, including Churchill Falls access
Hydro
Nuclear
Thermal
96.6%
3.2%
0.2%
Existing HQ Transfer Capabilities
to the United States
To NEPOOL:
To NYPP-West
1,800 mw
1,200 mw
Hydro-Quebec Supplies
Most electricity consumed in Quebec
9 Municipal Systems
1 Regional Cooperative
15 Utilities in the Northeastern U.S., Ontario and New Brunswick
The Province of Quebec Generated
The political future of Quebec is a large, unresolved debate,
and provincial secession has been an ongoing question for
more than 30 years. There is currently no firm referendum timetable for separating. The Parti Quebecois, reelected to power
C$ 185 billion in 1997 total Canadian GDP, second only to
Ontario
C$ 50 billion in revenues to the Canadian government,
second only to Ontario
5
Duff & Phelps Credit Rating Co.
Credit Analysis
Hydro-Quebec
Coverages-Ex. Non-Cash
Interest Coverage - Ex. Non-Cash
EBITDA/Interest Expense (X)
Internal Cash % of Construction
Internal Cash % of Total Cap. Req.
Return on Invested Capital
Return on Common Equity
Common Dividend Payout Ratio (%)
Internal Cash % of Total Capital
1998
1997
1996
1995
1994
1993
1.17
1.66
74.1
37.3
2.5
5.2
41.1
2.9
1.22
1.71
125.8
45.5
1.5
6.2
45.4
3.9
1.11
1.54
99.2
49.8
1.0
4.3
0
4.0
1.05
1.40
62.5
41.8
0.8
3.3
0
3.3
1.06
1.39
59.6
46.3
1.4
5.9
0
3.8
1.02
1.34
47.0
30.0
3.3
14.0
0
4.1
0.0
75.3
0.6
75.4
0.0
24.6
76.2
4.0
0.0
75.1
0.5
75.2
0.0
24.8
75.7
1.5
0.0
75.6
0.3
75.6
0.0
24.4
75.9
0.0
0.0
76.6
0.3
76.6
0.0
23.4
76.9
3.8
0.0
76.5
0.2
76.5
0.0
23.5
76.8
8.2
0.0
75.8
1.2
75.2
0.0
23.9
75.5
#DIV/0!
8,812
7,913
1,589
3,844
0
3,844
3,272
0
679
8,287
7,758
1,545
3,841
0
3,841
3,153
0
786
7,680
7,405
1,427
3,676
0
3,676
3,312
0
520
7,614
7,331
1,228
3,686
0
3,686
3,514
0
390
7,297
7,004
1,096
3,476
0
3,476
3,284
0
667
7,036
6,745
1,020
3,275
0
3,275
3,201
0
761
54,018
40,730
0
8,914
51,919
39,031
0
8,514
51,141
38,682
0
8,085
51,116
39,177
0
7,565
49,225
37,676
0
7,175
45,512
34,220
0
6,508
1,832
279
1,553
2,097
234
1,835
4,166
1,723
899
2,357
357
2,000
1,590
932
1,878
4,400
1,415
529
2,039
0
2,039
2,056
(43)
2,082
4,095
1,680
275
1,699
0
1,699
2,717
13
1,339
4,069
1,820
283
1,888
0
1,888
3,167
116
796
4,079
3,005
293
1,850
0
1,850
3,934
263
1,960
6,157
3,183
291
161,373
142,808
-3.0
44,693
3,349
451
4,933
162,533
147,291
1.9
44,818
2,835
288
4,068
163,546
144,510
1.7
44,124
2,777
105
3,282
166,101
142,036
2.2
42,861
3,447
163
3,199
158,166
139,002
1.5
40,098
4,627
220
3,731
152,099
136,978
na
36,663
5,906
180
2,887
AA
A2
A+
AA
A2
A+
AA
A2
A+
AA
A1
A+
AA
A1
A+
% of Total Capital
Mortgage Bonds
Unsecured & Other Debt
Short-term Debt
Total Debt
Preferred Stock
Common Equity
Debt Adj. for Purch. Pwr. Cap. (%)
% Growth in Invested Capital
Fundamental Financial Information
Revenues
Revenues Less Energy
Depreciation & Amortization
Pre-tax Operating Income
AFC & Deferred Expenses
Earnings for Interest
Interest Charges
Preferred Dividends
Balance for Common
Total Invested Capital
Total Debt
Total Preferred
Retained Earnings
Cash Flow
Cash Flow From Operations
Dividends (Pref. and Common)
Internal Cash
Construction Excluding AFC
Other Investments
Redemptions
Total Capital Requirements
Total Financing
Total Purchased Power Expense
Other Data
KWH Sales Total (MM)
KWH Sales Retail (MM)
% Growth in Retail Sales
Net Utility Plant in Service
CWIP
Nonutility Property & Investments
Regulatory Assets
Ratings History
Duff & Phelps
Moody’s
Standard and Poors
AAA2
A+
55 EAST MONROE STREET ● CHICAGO, ILLINOIS 60603 ● (312) 368-3100 ● FAX (312) 368-3155
Information was obtained from sources believed to be accurate and reliable. However, we do not guarantee the accuracy, adequacy or completeness of any information and are not responsible
for any errors or omissions or for the results obtained from the use of such information. Issuers of securities rated by DCR have paid a credit rating fee based on the amount and type of
securities issued. We do not perform an audit in connection with any information received and may rely on unaudited information. Our ratings are opinions on credit quality only and are not
recommendations to buy, sell or hold any financial obligation and may be subject to revision, suspension or withdrawal at any time as necessary due to changes in or unavailability of information
or other circumstances.
Copyright © 1999 Duff & Phelps Credit Rating Co. All rights reserved. Contents may be used by news media with credit to Duff & Phelps Credit Rating Co.
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